Dedicated to the sunset of government planning

Infrastructure Week

The Trump administration has declared this to be “infrastructure week,” with President Trump and Elaine Chao partaking in a traveling road show to sell the administration’s ideas. Some people say that this is just a way to take the nation’s eyes off of the Comey hearings, and if so, it’s working as a lot of electrons and not a little ink are being devoted to infrastructure.

Others are claiming that Trump doesn’t actually have an infrastructure plan, but that’s not true, as the Antiplanner revealed last week. The plan isn’t 1,000 pages long, but it contains seventeen distinct proposals that have all been fleshed out in other places, including a variety of studies from Heritage, Reason, the Competitive Enterprise Institute, and yes even Cato.

What really aggravates some people, especially Democrats, is that Trump isn’t proposing to spend a trillion federal dollars on hundreds of juicy pork barrel projects. Instead, he is proposing to leverage about $200 million in federal tax credits and other incentives to get the private sector to spend a trillion dollars on infrastructure.

Democrats claim that the Trump plan is a “just a private money-making operation for the big business buddies of the president.” And what would you call spending $250 million a year on 8-mph streetcars? Or $4 billion a year on 20-mph light rail? Or $70 billion on California high-speed rail that won’t actually run at high speeds? Oh right, those construction projects are private money-making operations for big business buddies of Democrats, so that makes them alright. Somehow, spending $200 billion federal dollars is supposed to be morally reprehensible while spending $1 trillion is not.

There are good reasons why we don’t need to spend more federal dollars on infrastructure. First, the infrastructure crisis is way overblown. Yes, some infrastructure is in bad shape, but in general state highways, water systems, electrical systems, and other infrastructure that is paid for out of user fees is in good shape. Some people want to politicize infrastructure that is still funded out of user fees, but the Trump plan avoids that mistake.

Second, the reason infrastructure that is paid for out of tax dollars is in bad shape is because politicians prefer to spend money on construction of grandiose monuments while contributing very little to maintenance. Spending more federal dollars on infrastructure would only make the problems worse, so the fact that the Trump plan doesn’t propose to do that is a good thing.

Third, since most real infrastructure problems involve things that are not paid for out of user fees, the solution is to figure out better user fees and better incentives. That’s one of the things the Trump plan does: from air traffic control to highways to transit to water, the point is to create better incentives, usually through user fees.

Fourth, most infrastructure really isn’t a federal problem. Why should federal taxpayers pay to build a light-rail line in Salt Lake City, a busway in Indianapolis, or a streetcar in Fort Lauderdale? Another big part of Trump’s plan is to transfer these responsibilities to local governments. Naturally, local politicians eager for “free” federal money hate that idea.

Those who expected to see one big fat infrastructure bill are bound to be disappointed because infrastructure is really many different problems and each demands its own solution. Of course, for some politicians the only solution to any problem is to throw other peoples’ money at it. Fortunately, the current administration doesn’t agree.

The AntiPlanner is *much* too optimistic that Congress is going to adopt the Trump infrastructure plan. The are many reasons to be skeptical that anything more than token measures will come out of this, if anything at all.
* Trumps influence on Capitol Hill is weak and probably becoming weaker
* Rural interests are already expressing concerns, as reported in the Wall Street Journal June 8. “Donald Trump’s Infrastructure Plan Faces an Urban-Rural Divide in Congress” https://www.wsj.com/articles/donald-trumps-infrastructure-plan-faces-an-urban-rural-divide-in-congress-1496925503
* To pass anything, there will probably need to be near-unanimous Republican support, and with slim majorities, rural interests and moderate Republicans, that seems virtually impossible (witness the health care debate)
* Previous reauthorizations of transportation bills including FAST have been difficult and were preceded by short-term stopgap extensions. This was mainly due to funding, but keep in mind that the two recent bills generally continued established policies and did not implement a sea change in policy. A massive change in policy will be much more difficult than previous bills.
* Congress has shown little interest in PPPs and vast expansions of tolling in previous transportation reauthorizations
* It will be very difficult or impossible to get $200 billion in funding for the public share of PPPs without raising taxes (presumably the fuel tax) or increasing the deficit. Any deficit-increasing legislation will be for tax cuts, not infrastructure. Tax credits for PPPs must still be scored as a cost.
* PPPs are generally not in the public interest because they drastically increase the overall long term cost of infrastructure due to interest payments and/or private profit margins, the costs of collecting tolls, and the cost of toll road bureaucracies.
* The toll road bureaucraciies in Houston and Dallas-Fort Worth are large and growing, and Houston’s HCTRA serves a a slush fund by diverting $124 in toll revenue out of the agency in 2016 (see annual report). New York City’s toll road bureaucracies also are well-known for size and cost, including using tolls to fund WTC One. So if the Antiplanner thinks we’re going to get more efficient government with more toll road bureaucracies, then he’s in fantasy land.
* Without “goodies” for urban rail systems in dire straits (Washington DC, Chicago, Boston), a large block of potential support is immediately lost
* Tolling may work on some highways, but they don’t help for most other issues, including transit. Sure, federal spending on transit may be wasteful, but we’re talking about Congress. There is a large representation in Congress from Blue States and cities (including Red State cities) that want transit money.
* Congressional leadership is going to need to focus its effort on a hoped-for tax overhaul, the budget, and health care. I can’t see a difficult and contentious infrastructure plan as being a priority item.

So I’m not expecting any legislation anytime soon, and there’s a good chance we may see nothing at all.